By Chad DePasquale, Director of Strategic Initiatives, HESCO
“Why don’t you have this in stock?”
This is a phrase I’ve heard many times over my 11 years at HESCO. It’s one I would like to address by giving a little glimpse into how HESCO makes stocking decisions on what should and should not be on the shelf.
Distributors must bring value to the local markets they serve, and some would argue the largest value they bring is immediate access to inventory. Stocking an item locally can mean the difference between your line being down for less than a few hours or a machine making its ship date to avoid costly penalties. So, when I hear that phrase above, I agree with you 100% -- we should be stocking the items you purchase … so long as it meets certain criteria.
In most cases, if we sell an item 100 times a year, that item better be on our shelf. Conversely, if we sell an item once a year, guess what’s not going to be on the shelf when you call next time for it three years later? What I’m driving at here is the first criteria of stocking an item: how often is it sold? The more often it’s used and sold in our market, the better chance it has on being stocked at HESCO. If it’s sold once every year or two, we can’t justify the cost of keeping the item on the shelf.
We want to stock as much product as we can to meet customers' ongoing needs.
It would be great if we could take our catalog of over 600,000 items and put one of each on the shelf. But what would not be good is us going out of business a few months later because we just spent the GDP of a small nation on inventory that is not selling. If we invest in product that doesn’t sell, we cannot make money to pay the bills. A simple analogy to bring it to our personal lives: when you have a party, do you buy every kind of soft drink at the grocery store or do you buy the ones you know will have the most chance of being consumed? From prior parties you know Coke, Dr. Pepper, and Sprite went quickly, where Caffeine Free Diet Coke and Mountain Dew were barely touched. Which ones are you going to buy and not buy for this party? Past history influences future stock or, in terms of the example, which soft drink brand to purchase.
What determines what we should stock? This is a combination of our Enterprise Resource Planning (ERP) software combined with the human element. Our ERP has a trigger that turns an item to stock after a certain number of sales in a 12-month period. Every month, we monitor items that could potentially turn to stock and add them to inventory if warranted.
Did you know we have stocking agreements?
If there is a must-have item you’d like us to stock, please reach out to us and tell us what that is. We’ll do some research on the item and create a stocking agreement that ensures we’ll keep X amount on the shelf if you agree to buy X amount in a year. The agreement is an understanding that if money is invested in inventory that is only for you, you will commit to buy that inventory.
Why might we not stock some items that are sold frequently? Typically, that item is as special order or non-cancel/non-return item. This means that if we stocked the item and then suddenly it stopped selling, we could not return this to the vendor for credit.
The bottom line is that we want to stock items for you. It makes us more efficient when we have the items you use frequently on our shelf ready to ship out the same-day. Not to mention it make for a happy customer and solidifies our value in the supply chain. If the item meets all the criteria of having a stock status, it better be on our shelf. If you think there is an item you buy frequently and you’re not seeing it in stock, let us know below!